Chapter 11

"Vera."

"What?" she answered without even looking away from her computer screen. Her fingers did not slow down in the least bit.

William frowned at the tone of voice that she used in answering him. It seemed to him as if she was upset about something. Dismissing his concerns, he said, "I need you to research the sex industry."

"Excuse me," Vera said drawing out each word twice as long as would be normal. She saved the file she was working on before turning to face William. The expression on her face could have curdled milk.

"I need you to research the sex industry," William repeated now that he had her full attention. He couldn't believe that he had neglected such a major economic sector in gathering data.

"And the nature of the research that you want me to perform is?" Vera asked narrowing her eyes.

"I need to know about prostitution, sex shops, online sex sites, and any other areas of the sex industry that I may not be aware of," William said. Almost immediately the adult film industry, strip clubs, and magazines came to mind. He knew that ten minutes with Happy Harry would have given him a complete list of businesses that could be considered as part of the sex industry. That thought reminded him how much he missed the old man.

"I can tell you all you need to know in one word."

Wondering what she meant, William asked, "What word?"

"Disgusting."

That was not the reply that William had expected. He said, "I've gotten data about all of the other major economic sectors in the United States. I can tell you how much the typical family in every economic stratus spends on housing, health care, food, entertainment, travel, vacations, energy, and manufactured goods. I can't tell you how much is spent in the sex industry."

"There is a good reason for that," Vera said in a cold voice that could have frozen water.

"What?" William asked not even sure what he meant by the question.

"It is disgusting," Vera said turning back to her computer as if dismissing him. Her fingers went back to work on the keyboard, but the rhythm of her typing was a lot slower and less steady.

William stood there and stared at her for a full minute. He asked, "You are going to research it for me, aren't you?"

Vera huffed and said, "I'd rather not."

"Why not?"

"It is disgusting."

Stunned, William was at a loss as to what he should say. No one had ever treated him in that fashion. Finally, he said, "It doesn't matter if you consider it to be an illegitimate area of business, but as an industry it is of major economic significance. I want to know about the business numbers, not the parts about how tab A gets inserted into slot B."

"It is disgusting and should be eliminated," Vera said folding her arms across her chest. Nothing that William could say would change her mind on the matter.

"How difficult would be it be eliminate it?" William asked trying a different tactic to get the information he desired.

"It would be impossible. There are too many perverts and they spend too much money," Vera said looking down her nose at him.

"How much do they spend?" William asked.

"I don't know," Vera answered with a frown.

"How can you eliminate it if you don't know how and where they spend their money?"

"I don't know."

"So find out."

With an expression on her face that made William think of someone eating worms for breakfast, Vera said, "Okay."

Lucy stared at William for a second and laughed. Shaking her head, she asked, "How could you forget that?"

"I just didn't think of it," William answered. Although he was sure that it had to have been covered in his courses, he couldn't recall any of his books on economics discussing the matter.

"You can't be serious," Lucy said looking puzzled.

"I am. The closest they came to it was to discuss the second economy, but that was cast in terms of organized crime, undisclosed tips, fraud, cash only businesses, and work performed without being reported," William answered. He had used law enforcement data for the organized crime data and fraud. Of course, the IRS had estimates for the undisclosed tips and work that went unreported. Shaking his head, he said, "It was like they didn't even want to admit that the sex industry existed."

Lucy frowned and looked up at the equations on the board. Curious, she asked, "What is the second economy?"

"If you look at the top eight equations and the bottom eight equations, you'll see that there are basically two economies. The first economy, described by the top eight equations, is the legitimate one. All transactions are performed in a legal fashion with appropriate taxes paid. The second economy, described by the bottom eight equations, is a cash only economy although it does admit to a certain amount of barter. These transactions are never reported and taxes are not paid on them. Usually the price of services in the second economy is lower than if it is provided under the first economy," William answered.

"What do you mean?"

"Well, suppose that I have a car towed for some reason. If I pay the guy with a credit card, then he has to declare it and pay the taxes on it. That could be as much as half of what he receives. The money is directly tied to him receiving it. On the other hand, if I pay the guy in cash, he doesn't have to report it since there is nothing tying him directly to the money. That means he doesn't have to pay any taxes on it. He can charge only three quarters of the legitimate price and still have more money in his pocket."

"How big is this second economy?"

"About the same size as the first economy," William answered with a smile.

Stunned, Lucy sat back in her chair and considered the matter. Her eyes drifted over to the equations on the board and considered those that represented the second economy. Finally, she asked, "Who earns most of that money?"

"Every economic class earns a bit of it. There are an awful lot of people who are officially earning at a poverty level, but actually earn twice that much."

Shaking her head in disbelief, Lucy said, "Just think about it. If you were able to actually tax that second economy, then the whole national debt could be paid off in no time."

"Actually, I doubt that very much. The first economy would probably tank as a result. It depends upon the infusion of money from the second economy. If the second economy were to get taxed, the costs of those goods and services would go up and transactions would go down. The first economy would suffer from a major loss of sales as a result of the downturn in the second economy," William said.

"You are telling me that there is a black market in the United States of America."

William pursed his lips and nodded his head before he answered, "Yes."

"I thought that was a third world or war time phenomenon."

"Most people think that. I'd bet that most people who are involved in the second economy don't even realize that they are participating in a black market. They just figure they are earning a little extra cash to buy that DVD player at the electronics store," William said.

Lucy shook her head and laughed. She said, "And you forgot to take into account the entire sex industry in all of those equations on the board."

"That's right."

"You've got a lot of work to do," Lucy said. Her eyes twinkled with amusement at the idea that William had forgotten something so significant.

"That's right," William said with a sigh.

"You're going to need some help from me," she said.

Smiling at the thought of being able to watch her work, William said, "That's right."

"You don't seem disappointed by that prospect."

"I'm not," William said grinning at her.

As was always the case in December, the Phoenix homeless hotel was crowded. It was a matter of seasons. Many of the homeless men and women who roamed the states came to warmer climates when the weather turned cold. That didn't mean they necessarily left the cold behind, but it did mean that their chances of surviving the winter were greater.

William and Lucy, followed by Ling and the bodyguards, walked to the shack where essential items like food, clothing, and blankets were distributed. William walked up to the window and looked at the black man running the place was busy brewing another large urn of coffee. As always, William wondered how a black man had ended up with hair that particular color of red. He said, "Hey, Copperhead."

"Half Feather, it's good to see you. It's even better to see Lucy Diamonds," Copperhead replied giving Lucy a wink. The man had been busy since early in the morning preparing for the Christmas meal. It wasn't that he had to cook the food, but that he had to set up the camp for distributing the food that William was bringing and the larger than normal crowd that it would draw.